If the bank returns $1,060 on the $1,000 deposited for a year during which inflation was 4 percent,the real interest rate is

Name: If the bank returns $1,060 on the $1,000 deposited for a year during which inflation was 4 percent,the real interest rate is
Brand: Quizplus
Rating: 4.9 (44 reviews)

Question

Quizplus · Accepted Answer

The nominal interest rate is 6% ($1,060 - $1,000 = $60, which is 6% of $1,000). The real interest rate is the nominal rate minus the inflation rate: 6% - 4% = 2%.

If the Bank Returns $1,060 on the $1,000 Deposited for a Year